This is like one of those questions that goes: a farmer has three daughters, ...[lots of details of the ages of the daughters]... and ends "does the farmer have a dog?"
Because the problem, as far as I can see, is nothing to do with the details of your source XML or your XSLT code, it's all to do with the capabilities and configuration of IE and its plugins. (Which is not something I can help you with.)
You didn't actually tell us whether you were running the transformation in the browser.
It would also be useful to know whether you can successfully display HTML pages that contain directly-embedded SVGs.
Author, XSLT Programmer's Reference and XPath 2.0 Programmer's Reference